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Exploring the Linkage Between Domestic Savings, Investment and Economic Growth: Evidence from the Eastern European Economies

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  • Çolak Olcay

    (Assoc. Prof. Dr. Institution: Faculty of Economics and Administrative Sciences, Department of Economics, Usak University, Usak/Turkey)

Abstract

Beyond the theoretical aspects, the interplay between savings, investment and economic growth has vital importance in designing the proper economic policies for the long-run developmental objectives particularly for developing countries. Accordingly, this present paper aims to investigate the dynamic linkage between domestic savings, investment and economic growth for the Eastern European economies by incorporating the annual panel data spanning over 1995-2021. By revealing the existence of long-run relationship, the paper derives that savings and investment are the key factors of economic growth, which is vindicated by the recently pioneered model so called cross-sectional autoregressive distributed lag (CS-ARDL) method. Furthermore, the results of panel causality tests confirm the validity of causal nexus running from savings and investment to economic growth. In addition, the paper concludes with some policy recommendations that are drawn upon the findings.

Suggested Citation

  • Çolak Olcay, 2025. "Exploring the Linkage Between Domestic Savings, Investment and Economic Growth: Evidence from the Eastern European Economies," South East European Journal of Economics and Business, Sciendo, vol. 20(1), pages 15-29.
    • Handle: RePEc:vrs:seejeb:v:20:y:2025:i:1:p:15-29:n:1002
    DOI: 10.2478/jeb-2025-0002
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    More about this item

    Keywords

    Savings; Investment; GDP per capita; Eastern European Economies;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General

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